Sri Nath and ors. Vs. Jagannath and ors. - Court Judgment

LegalCrystal Citation

legalcrystal.com/459016

Subject

Property

Court

Allahabad

Decided On

Nov-18-1929

Reported in

AIR1930All292

Appellant

Sri Nath and ors.

Respondent

Jagannath and ors.

Excerpt: - - 6,000 a good part had been entered fictitiously. 6,000 was fictitious, and further denied that property was worth anything like rs. 2. there was no specific plea in the written statement that the defendants had made due enquiry before the sale and were satisfied that legal necessity existed. the learned subordinate judge has believed defendant 1's statement that he had made enquiries as to these previous debts and was satisfied that they existed and that in fact he had paid them off. in view of this statement the learned subordinate judge has accepted the defendants' case that this sum was required for that purpose we see no good ground for taking a different view. so far as the interest on the previous deed is concerned it undoubtedly goes with the first item and is equally good......sulaiman, j.1. this is a plaintiffs appeal arising out of a suit for recovery of possession of immovable property by avoidance of a sale-deed dated 13th september 1910, executed by mathura prasad, the ancestor of the plaintiffs, in favour of defendant 1. defendants 2 and 3 are the sons of the vendee and are joint with him. almost all the members of mathura prasad's family, eleven in number, excluding one son ram partap and one grandson bhairon prasad who have been impleaded as pro forma defendants, have joined in the suit. a large number of these plaintiffs are still minors. the case put forward in the plaint was that mathura prasad was a very old, deaf and blind person and was a member of a joint hindu family which owned the property in dispute jointly; that the defendant obtained a.....

Judgment:

Sulaiman, J.

1. This is a plaintiffs appeal arising out of a suit for recovery of possession of immovable property by avoidance of a sale-deed dated 13th September 1910, executed by Mathura Prasad, the ancestor of the plaintiffs, in favour of defendant 1. Defendants 2 and 3 are the sons of the vendee and are joint with him. Almost all the members of Mathura Prasad's family, eleven in number, excluding one son Ram Partap and one grandson Bhairon Prasad who have been impleaded as pro forma defendants, have joined in the suit. A large number of these plaintiffs are still minors. The case put forward in the plaint was that Mathura Prasad was a very old, deaf and blind person and was a member of a joint Hindu family which owned the property in dispute jointly; that the defendant obtained a sale-deed from Mathura Prasad of property worth Rs. 10,000 on the date mentioned above without any legal necessity or without any need for the payment of any antecedent debt for a sum of Rs. 6,000 only, which was not binding on the family. There was a further allegation that even out of Rs. 6,000 a good part had been entered fictitiously. There was not any specific allegation of any fraud or undue influence having been committed on Mathura Prasad, though it was alleged generally that he had been induced to enter into this transaction. The contesting defendants pleaded that the sale was for legal necessity, and denied that any part of the Rs. 6,000 was fictitious, and further denied that property was worth anything like Rs. 10,000. They urged that the sale consideration was required for the payment of antecedent; debt and lawful necessity of the plaintiffs' family and that the transaction had been entered into with the advice and consultation of Ram Pratap that after the completion of the document no member of the family ever took any objection in respect of it or of the possession of the defendants and that the family had accordingly acquiesced in the transfer. The learned Subordinate Judge has found that the family was joint at the time when the sale took place and that the property transferred was joint family property. He has also found that there was no evidence to prove any fraud or undue influence. These findings are not challenged before us in this appeal. He has further found that the sale deed was executed for family necessity and for the payment of certain antecedent debts. He has not recorded any finding as to the value of the property transferred and has not expressed his opinion whether the consideration was or was not inadequate. Examining the sale consideration in detail he has come to the conclusion that all the items of it were either for antecedent debts or for family necessity. Some of the debts which had been paid off by the defendants were debts incurred on documents executed, not by Mathura Prasad himself, but by some of his sons and grandsons, and with regard to these the learned Subordinate Judge has expressed the view that Ram Partap and Bhairon Prasad were really managing the affairs of the family and were practically transacting all its business and that these debts, having regard to the fact that Mathura Prasad in the sale-deed acknowledged his liability to pay them, must have been incurred for the family and were therefore binding on the family. He has in the alternative held that the acknowledgment of these debts by Mathura Prasad in the sale-deed would in any case make them antecedent debts, so as to justify his alienation of the family property in order to pay them off.

2. There was no specific plea in the written statement that the defendants had made due enquiry before the sale and were satisfied that legal necessity existed. There was also no specific issue on this point. 'When two of the plaintiffs were examined, no questions were put to them on behalf of the defendants to show whether any enquiry had been made from them. But the question was assumed to be covered by issue 5 which related to the existence of legal necessity. The learned Subordinate Judge has believed defendant 1's statement that he had made enquiries as to these previous debts and was satisfied that they existed and that in fact he had paid them off. On these findings the learned Subordinate Judge has dismissed the plaintiffs' suit in its entirety. The plaintiffs have accordingly come up in appeal and on their behalf most of these findings are challenged.

3. The sale-deed of 13th September 1910 was executed by Mathura Prasad for Rs. 6,000. Out of this Rs. 900 were paid in cash before the Sub-Registrar. Rs. 119 were taken in order to meet the expenses of execution and registration of the deed. The rest was left in the hands of the vendee in order to payoff certain named creditors and to discharge certain named debts. This sale-deed was attested by the executant's son Ram Partap and his grandson Bhairon Prasad. His son Ram Partap was also present at the time of its registration.

4. So far as Rs. 900 is concerned, the recital in the deed was that it was required to meet the plaintiffs' household necessity. The oral evidence led on behalf of the defendants was that the gauna ceremony of Sidh Narain's daughter was to take place soon after and the money was borrowed for that purpose. The plaintiffs' witness Bindhachal has admitted that the gauna ceremony of the girl took place about that time. In view of this statement the learned Subordinate Judge has accepted the defendants' case that this sum was required for that purpose We see no good ground for taking a different view. It must therefore be held that Rs. 900 were required for family necessity.

5. Rs. 119 were required for purposes of execution and registration of the document and they would be valid or invalid according as the document in dispute stands or falls. Of the rest of the amount, Rs. 1180, were left in the hands of the vendee for payment of amount due on a mortgage deed dated 14th November, 1907, executed by Mathura. Prasad in favour of Suraj Partap.. prima facie, this was an antecedant debt which Mathura Prasad had authority to pay off by alienation of a part of the family property. The only objection raised against this amount is that the mortgage-deed of 1907 has not been proved to have been duly attested. It is suggested that two of the attesting witnesses are dead and the remaining attesting witness, viz. Ram Partap, was not called, and accordingly the deed has not been proved to have been a mortgage-deed. In our opinion it was wholly unnecessary in this case to produce any attesting witness. The defendant is not trying to enforce this deed as a mortgage deed, and it was only proved in order to show that the amount was due on it from Mathura Prasad. The execution of this document which was a registered one was within three years of the sale-deed and the proof of execution was sufficient to establish that the amount as due from Mathura Prasad. There can therefore be no valid objection to this item.

6. The second item of Rs. 1370 consisted partly of interest due on the mortgage-deed of 1907 and amount due on other document. So far as the interest on the previous deed is concerned it undoubtedly goes with the first item and is equally good. The rest of this amount as well as the balance of the amount in the hands of the vendee can be split up into two portions. Rs. 2381 represent the amount due on documents executed either by Mathura Prasad alone or executed by him jointly with some other members of the family. In our opinion when there was joint liability of Mathura Prasad to discharge these debts they became antecedent debts in lieu of which the property could be transferred. There can therefore be no question that they are valid and binding. The second portion, aggregating about Rs. 2,600, consists of 'the amounts due on a large number of promissory notes and bonds for every small sums of money varying from Rs. 49 to Rs. 99 executed between the years 1910 mostly by Ram Partap and some by Batuk Prasad, Bhairon Prasad and Sri Nath. These were due to three sets of creditors. In the sale deed of 1910 these various debts were not specifically mentioned but it was generally stated that Rs. 1,370 were due to one creditor, Rs. 350 to the second, Rs. 950 to the third, Rs. 675 to the fourth and Rs. 481 to the fifth creditor Jumna Dat who was the father of the vendee himself. The recitals in the deed show that Mathura Prasad directed the vendee to pay off debts due to these creditors on documents executed by himself with instructions to pay them off and keep the documents as authority. The language employed in the sale deed further shows that Mathura Prasad had in mind the existence of one document in favour of each of these three sets of creditors. As the deed stands, it is therefore impossible to connect the amounts left in the bands of the vendee for payment to these creditors with the debts due on the documents executed by Mathura Prasad's sons and grandsons. On the face of that document it is impossible to hold that Mathura Prasad acknowledged his own liability for payment of the debts due on documents which had not been executed by him but might be executed by the other members of the family. The learned Subordinate Judge, however, has held that there was possibly some mistake and misapprehension. According to him the real facts seem to be that neither Mathura Prasad nor defendant 1 at the time of the execution of the sale deed in dispute knew the nature of Parbhu Nath's debts. He has expressed the same view with regard to the debts due to other creditors. His conclusion is that there is nothing on the record to prove that there was any other debt due to these creditors and therefore it could not be urged that the debts which had been paid off by the defendants were fictitious debts. He has attributed the peculiar language of the saledeed to 'some mistake of describing it.' Apart from the fact that Mathura Prasad acknowledged his liability to pay these amounts to the creditors named, there is no evidence on the record to show that the debts which had actually been discharged by the vendee and which were due on documents executed by other members of the family were debts which had been required for family necessity or were debts which were in the contemplation of Mathura Prasad at the time when the document was executed. The burden is on the defendants to establish that the3e debts were binding on the family and in our opinion the defendants nave not discharged that burden.

7. We do not agree with the view expressed by the learned Subordinate Judge that the recitals in the sale deed amounted to an acknowledgment by Mathura Prasad of the debts which made those debts antecedent debts. In the first place, as has been pointed out above, the acknowledgment did not specifically refer to these debts. In the second place, that acknowledgment being itself a recital in the sale deed could not make those debts antecedent debts. The mere fact that two other members attested the deed does not conclusively establish any legal necessity in the absence of any proof of legal necessity of these debts it is impossible to hold that the alienation in lieu of these debts would be good. It has not been contended on behalf of the respondents that a manager of a Hindu family is entitled to alienate property in order to pay off debts incurred by the other members of the family. There is here no proof that the debts incurred by the other members had really been incurred on behalf of the family.

8. At the time when the judgment was pronounced by the Court below the view which had prevailed in view of certain rulings of this Court was that in order to establish legal necessity the Court had to find whether a substantial portion of the sale consideration had been required for such purposes; in view of the Subsequent pronouncement of their Lordships of the Privy Council in the case of Sri Krishen v. Nathu Ram and subsequent cases, the true question which calls for an answer in such cases is whether the sale itself was one which was justified by legal necessity. Whether any portion was or was not required for family necessity is not the most important question. What we have to decide is whether the sale of the property was itself for necessity. As mentioned above, the plaintiffs had put forward in the forefront of their plaint the statements that the property transferred was worth Rs. 10,000 at the time of the sale and that it was sold for a grossly inadequate consideration. The defendants denied this allegation. In Support of their case the plaintiffs produced a copy of a sale deed dated 11th November 1912, executed by Mathura Prasad in respect of one anna share in this very village for a sum of Rs. 2,000. They also produced a copy of a compromise decree obtained by the vendee Jagannath under which he pre-empted this property. At the rate at which this property was sold, the value of the disputed property would come to considerably more than Rs. 10,000. When the defendant Jagannath was in the witness-box a question was put to him as to his having preempted this property and of course he had to admit it. In re-examination he offered no explanation as to why he had paid such a high price. On the other hand, as regards the disputed share his reply was that he had purchased it at the rate of 9 p. (i, e., per 100) which would give it a very high value. But no revenue papers were produced on his behalf to show the actual profits of this share and all that we know is that the Government revenue assessed on the entire property sold is Rs. 155-13-7. Of course, there was no specific issue on the question of the value of the property and we have no express finding by the Court below on this point. In our opinion, in order to decide whether the sale of this property in 1910 for a sum of Rs. 6,000, out of which only a part was for legal necessity was good it must be ascertained what was the actual value of the property at that time.

9. As regards the finding relating to bona fide enquiries having been made by the defendants we find that finding also is unsatisfactory. We have already remarked that there was no such express plea in the written statement that there was no express issue on the point and that no question was put to two of the plaintiffs when they were in the witness-box. Defendant 1 in his examination-in-chief also did not say a word about having made any bona fide enquiries and being satisfied that the legal necessity existed before he took the property. In cross-examination however he was questioned about the matter, and did state that he made enquiries and asked Sheo Garul Ram, Kedar Nath (creditors) Sri Nath, Batuk Prasad, Raghunath Prasad and Jagadamba Prasad as to whether the sale deed was necessary or not. We asked Sheo Garul Ram as to whether any debt was due to him or not whereupon he replied that a debt of Rs. 2,550 was due to him and that a suit would be brought in respect of it if the sum were not paid. But Sheo Garul Ram gave no details. Kedar Nath told him that after an adjustment of accounts a sum of Rs. 2,550 had been found due and that he was ready to bring a suit. As regards the plaintiffs, Jagannath stated that he asked Sri Nath why it was necessary to execute a sale deed. He replied that the execution of a sale deed was necessary as he had to pay the debt which had become considerable, that he had to defray the expenses of the gauna ceremony of his daughter the time for which was approaching, that he required money for cultivation of fields, that he could not meet the expenses without executing a sale-deed, and that he required the money for meeting the expenses of education of the children. Batuk Prasad told him that the sale deed was going to be executed on account of the payment of former debts the marriage of his daughter and other necessities.

10. As regards the creditors, it is significant that the defendants did not get particulars from them. Furthermore, the defendant has not even clearly stated that the creditors told him that the debts were due from Mathura Prasad himself much less that they were debts due under documents executed by Mathura Prasad. The statement as it stands is undoubtedly very vague and not definite. As regards the enquiry from the members of the plaintiff's' family we have already remarked that no question was put to Sri Nath and Jagadamba Prasad when they were examined. We might also point out that Jagadamba Prasad must have been a minor in 1910, and it is absurd to suggest that an enquiry was made from him. Even in 1917 when Jagannath Prasad himself sued Jagadamba Prasad he treated him as a minor under the guardianship of his uncle. It is further to be borne in mind that part of the debt was due to Jumna Dat, the father of the vendee himself, as to which there would be no need for enquiry from third parties. The defendant vendee was in a position to prove why those debts had been taken by the other members of the family from his father himself. The learned Subordinate Judge has overlooked the fact that Jagannath Prasad was an interested party to the suit and his oral statement cannot be accepted wholesale as it would have been if it were the statement of an independent person of respectability. No explanation has been offered by the defendant as to his having acquired one anna share in this village two years after the sale for a sum of Rs. 2,000. If the property was actually worth considerably more than the amount required for the transfer it would be difficult to hold that the defendant acted as a bona fide transferee in good faith. We therefore think that a material point which ought to have been gone into by the Court below has not been enquired into and in the absence of clear evidence to show the real value of the property in 1910 it is very difficult to come to a conclusion whether the sale itself was for necessity or not.

11. Before disposing of the appeal finally we therefore think that it is necessary to have a clear finding as regards the actual value of the shares sold on the 13th September 1910. Under the circumstances mentioned by us above we think it would be just to allow the parties to adduce further evidence on this issue. We accordingly direct that the issue noted above be sent down to the Court below and that after taking fresh evidence which the parties may tender it should record its finding and send it to this Court within three months, if practicable. On return of the finding the usual ten days will be allowed for filing objections. (On return of the finding their Lordships gave the following judgment). The facts of this case are fully set forth in our order dated 29th February 1928. In this suit the plaintiffs were seeking to avoid a sale deed dated 13th September 1910, executed by their ancestor in favour of defendant 1, on the ground that the transfer was unauthorised and was not for legal necessity. The defendants pleaded that the transaction was justified. The learned Subordinate Judge found that the entire consideration was good and was supported by legal necessity, and further found that the vendee had made enquires to satisfy himself that a necessity existed.

12. In appeal we examined the various items of the sale consideration and did not agree with the Court below with regard to several heads. As a result our conclusion was that including Rs. 119 which had been taken for the expenses of the execution and the registration of the deed legal necessity for Rs. 3,281 had been established but no necessity had been proved for Rs. 2,600.

13. We did not actually consider it necessary at that time to record a categorical finding on the question of due enquiries having been made by the defendant but we gave reasons in our order for our view that the finding on that point also was unsatisfactory. For the reasons given in our previous order we have no hesitation in saying that the vendee had failed to prove that he had made due enquires and was satisfied that the whole of Rs. 6,000 was required for legal necessity. We called upon the Court below to find the market value of the property transferred in order that we may be able to answer the question whether the sale itself was for legal necessity or not.

14. The Court below has returned a finding that the value of the property sold was between Rs. 6.000 and 7,000 and that Rs. 6,000 was not an unfair price.

15. Objections have been taken to this finding on behalf of the plaintiffs, but there is no objection on behalf of the defendants. Numerous documents were filed by the parties to serve as exemplers, and the learned Judge has taken into account the rates of purchase shown in those documents. We may point out that none of those sale deeds can be a correct criterion for determining the market rate because these rates vary considerably. Most of these sale deeds are of small shares in the village sold for a few hundreds of rupees. In such transactions the exact market rate is not always insisted upon the actual sale price depending mainly on the anxiety of the vendor to sell or the vendee to purchase the property. None of these documents is of the year 191.0. The rates generally shown by the documents produced by the defendants were about Re. 0-0-9 per cent per mensem, whereas the plaintiffs produced one document showing much higher rates viz., Re 0-1-6 per cent per mensem. In particular there was one sale deed dated 11th November 1912 under which a one anna share had been ostensibly transferred for Rs. 2,000. In a litigation following upon it the plaintiff Jagadamba Prasad was examined and stated that the real consideration was Rs. 1,000. The Court also found that actual consideration was Rs. 1,000 only (vide judgment at p. 51. of the supplementary book). In this litigation Jagadamba Prasad was one of the plaintiffs, and the judgment is admissible against him. Taking this rate as the basis of calculation the Court below has thought that the rate of Re. 0-1-8 was not unfair. On this the price of Re 0-7-0 would amount to Rs, 7,000. In addition to this Re. 0-7-0 share, another share of Re 0-1-0 and odd in another village was also sold which according to the learned Subordinate Judge might have been worth Rs. 700. Having considered these circumstances he came to the conclusion that the value of the shares sold was between Rs. 7,000 and 6,000. As generally there are fewer purchasers for large shares in a village, we agree with the Court below that the price of this property might have been between Rs. 6,000 and 7,000. Certainly the evidence does indicate that it could not have been less then Rs. 6,500 though it might have been more.

16. It is therefore impossible to say that the sale was for an unreasonably low price, though the amount required for legal necessity at the time was only just about half the price.

17. As regards the setting aside of the sale deeds, where only part of the consideration was for legal necessity the view which had prevailed in this Court was not quite in harmony with that which prevailed for instance in the Calcutta High Court. Their Lordships of the Privy Council in the leading case of Sri Kishen Das v. Nathu Ram expressed their disapproval of the view which has been expressed in some of the cases of this Court. At the time when we sent down an issue to the Court below only this pronouncement of their Lordships was before us. Since then two more pronouncements have been made, and they are to be found in the cases of Gauri Shanker v. Jiwan Singh and Ram Sunder Lal v. Lachhmi Narain A.I.R. 1929 P.C. 143. It is to be noted that in all these cases the High Court had set aside the transfers and their Lordships upheld the transactions. The first thing which is clear from these pronouncements is that the view which was expressed in at least one of the cases of this Court to the effect that:

if any part of the consideration was invalid and not binding on the plaintiff, the plaintiff, would be entitled to have the sale set aside.

is not sound.

18. It is obvious that the mere fact that a part of the consideration, however small, is not substantiated by legal necessity would not necessarily nullify the deed, or show that there was no justification for its execution.

19. In execution where the entire consideration is shown to have been advanced for legal necessity, no difficulty whatsoever arises, and there is no longer any further question as to any enquiry having been made by the transferee. But in cases where only part of the consideration is good difficulties are sometimes undoubtedly experienced.

20. The learned advocate for the plaintiffs has argued before us that in view of the opinion expressed by their Lordships it is no longer proper to consider whether a substantial portion of the consideration has been duly accounted for. We do not think that this is the affect of their Lordships' pronouncements. On the other hand in Sri Kishen Das's case , their Lordships re-affirmed the statement contained in Girdharee Lal v. Kantoo Lal [l874] 1 I.A. 321:

where a father has sold ancestral property for the discharge of his debts, if the application of the bulk of the proceeds is accounted for, the fact that a small part is not accounted for will not invalidate the sale.

21. Their Lordships remarked that this in itself was a correct statement of the law so far as it went, but that it was not a complete statement of the law. Their Lordships then observed:

it does not by any means follow that the sale will be invalidated wherever a part of the consideration not accounted for cannot be described as small.

Similarly in Gauri Shanker's case their Lordships condemned the practice which had crept up when necessitating and settling such cases upon principles of accounting, viz. that:

if upon strict accounting it is found that it be completely established that by far the most substantial part of the consideration was for family necessity, yet if a certain balance of the price remains unaccounted for or insufficiently proved then by that result the parties' interests are to be judged and the sale be set abide conditionally upon repayment by the vendor or his representatives of the substantial part referred to.

22. In view of what their Lordships have remarked it is now obvious that no hard and fast rule as regards any proportion can be laid down nor can one adopt any rule of thumb based on fractions or any graded scale. In each case the Court must consider the main question whether the sale itself was for necessity.

23. If the whole consideration is for necessity, no difficulty arises, and there need be no further inquiry. If the bulk of the proceeds is accounted for,' and 'a small part is not accounted for,'' that will not invalidate the sale. But even where 'part of the consideration not accounted for could not be described as small 'the sale is not 'necessarily invalid. We must then inquire further into its circumstances and find out whether the sale itself was not for necessity.

24. In Gauri Shanker's case their Lordships have explained their meaning on pp. 969 to 997 in the following words:

The real question that has to be considered is this whether the sale itself was justified by necessity their Lordships could not go back upon that decision. If the purchaser has acted honestly, if the existence of a family necessity is made out, and the price is not unreasonably low, he (the purchaser) is not bound to account for the application of the price.

25. This view has been reaffirmed by their Lordships in Ram Sundar Lal's case (3) where at page 437 after remarking that

the material question, however, is whether the sale itself was one which was justified by the legal necessity.

their Lordships proceeded to point out that a substantial portion of the consideration had been used for legal necessity, that due inquiries as to the necessity had been made by the purchaser, and that the consideration was adequate. Their Lordships at page 438 upheld the deed on the finding that the sale was effected after due inquiry, that the sale was for adequate consideration and that legal necessity had been proved to the extent of Rs. 7,744 out of Rs. 10,767, even though the defendants after a long interval of time had not been able to prove how the surplus was applied.

26. These cases lay down the principles which might to guide our decision in this case.

27. On the facts found we must hold that the sale of this property for Rs. 6,000 was not for an unreasonably low price, but that only Rs. 3,281 out of Rs. 6,000 (including Rs. 119 required for expenses) have been proved to be for legal necessity, and that the defendants have failed to prove that they made sufficient inquiries to satisfy themselves that Rs. 6,000 were required for legal necessity.

28. Although we cannot enter into the question of proporations or ratios and try to base our judgment on such proportions or ratios, the fact that nearly half of the amount has not been shown to have been justified cannot be lost sight of in arriving at the conclusion that the sale itself was really not for legal necessity. The defendants have made no attempt to show that there was really any urgent pressure on the vendor or on his estate which required an immediate raising of the whole amount or the sale of the entire-/7/-share.

29. Our conclusion therefore is that, taking the transaction as a whole and bearing in mind all the circumtances of the case, it is not established that the sale of-/7/-and odd share in 1910 was really for necessity.

30. It is not disputed before us that before the plaintiffs can claim prossession of this property they must make good to the vendee that part of the consideration which has been found to be for necessity. We accordingly allow this appeal, and setting aside the decree of the Court below decree the plaintiff's claim for possession of the property transferred on condition of their paying Rs. 3,281 plus a proportionate amount of Rs. 119 within four months from this date. In case the amount is deposited within the time allowed in the Court below the parties will receive and pay costs in proportion to their success and failure. If the amount is not deposited within the time fixed the suit shall stand dismissed with costs in both Courts.